Commerce Accountancy

Accounting Principles and Practice

1,241 Questions

Accounting principles and practice questions cover core concepts like assets, depreciation, financial statements, and ledger adjustments. These topics are essential for commerce students preparing for academic and competitive exams. Regular practice ensures a strong grasp of standard accounting standards and business operations.

Asset depreciationFinancial statement adjustmentsAccounting standardsSingle entry systemCapital expenditure

Accounting Principles and Practice Questions

Multiple choice organization of commerce and management cooperative organisation features, organisation, advantages and disadvantages of cooperative organisation cooperative societies cooperative society introduction to huf joint hindu family business

According to Indian Cooperative Societies Act, 1912, each society must transfer at least ___ of its profits to general reserve.

  1. One third

  2. One fourth

  3. One half

  4. One tenth
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under the Cooperative Societies Act of 1912, a cooperative society is mandated to transfer at least 25 percent (one-fourth) of its net profits to a general reserve fund.

Multiple choice elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

Interest on capital is credited to ___________ account.

  1. Expenses

  2. Income

  3. Capital

  4. Asset
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital is a contribution done by the owner in business. If any interest is payable, this need to be debited to Interest expenses and credited to the capital account.

Multiple choice elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

When the claim on account of loss of stock is fully recoverable from the insurance company, the journal entry will be ______________________.

  1. Cash A/c Dr.

    To Insurance Claim

  2. Insurance Claim A/c Dr.

    To Trading A/c

  3. Trading A/c Dr.

    To Insurance Claim A/c

  4. Insurance Claim A/c Dr.

    To P and L A/c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When the full loss is recoverable, the entire amount is debited to the Insurance Claim account and credited to the Trading account to offset the loss of stock.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

Goodwill, Copyright and Trademarks should be classified as ___________.

  1. Tangible assets

  2. Intangible assets

  3. Current assets

  4. Fictitious assets
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Goodwill, Copyrights, and Trademarks are assets that lack physical substance, which classifies them as intangible assets.

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

Which of the following is accounting equation?

  1. Capital = Assets + Liabilities

  2. Capital = Assets - Liabilities

  3. Assets = Liabilities - Capital

  4. Liabilities = Assets + Capital
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The basic accounting equation, also called as the balance sheet equation, represents the relationship between the assets, liabilities and capital of a business. It is the foundation for the double entry book-keeping system. For each transaction, the total debit equals the total credit. Following is the accounting equation:

Asset = Liability + Capital.

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

Dual aspect concept results in the accounting equation _____________.

  1. Capital + Liabilities = Assets

  2. Revenue = Expenses

  3. Capital + Profit = Assets + Expenses

  4. none of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Dual aspect is the foundation or basic principle of accounting. This concept states that every transaction has a dual or two-fold effect and should therefore be recorded at two places.

The duality principle is commonly expressed in terms of fundamental Accounting Equation, which is as follows :

Assets = Liabilities + Capital

In other words, the equation states that the assets of a business are always equal to the claims of owners and the outsiders. The claims also called equity of owners is termed as Capital(owners’ equity) and that of outsiders, as Liabilities(creditors equity).

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

Net worth of the business means _________________.

  1. Total assets minus depreciation

  2. Including expensene and debts.

  3. Total assets minus total outside liabilities

  4. Fixed assets minus current assets
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Net worth (or owner's equity) represents the residual interest in the assets of the entity after deducting all its liabilities.

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

Both assets and owner's equity (i.e. capital) would be increased by ___________.

  1. Proprietor's withdrawals

  2. Sale of good on credit

  3. Purchasing a machinery on credit

  4. Retained earnings
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When Owner is retaining earnings , it will  increase owners equity along with the cash or bank balance. 

Hence, option D is correct.

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

If outside liabilities and owners equity are added we get ______________.

  1. Total Liabilities

  2. Net worth

  3. Shareholders Fund

  4. Gross Block
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The total of outside liabilities and owner's equity represents the total claims against the assets of the business, which is defined as total liabilities (or total equities).

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

An increase in one liability may lead to _________________.

  1. Increase in another asset

  2. Decrease in liability

  3. Both (A) and (B)

  4. Either (A) or (B)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An increase in one liability can be balanced by a decrease in another liability (e.g., paying off a creditor with a bank loan) or an increase in an asset (e.g., taking a loan to buy equipment).

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

Capital is the difference between.

  1. Income and expenses

  2. Sales and Cost of goods sold

  3. Assets and liabilites

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital represents the owner's claim on the business assets. It is calculated as Total Assets minus Total Outside Liabilities.

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

If assets are increased by 2,000 and liabilities are increased by 1,200. What will be the effect on business equity?

  1. 800

  2. 2,000

  3. 3,200

  4. 1,200.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
The duality principle is commonly expressed in terms of fundamental Accounting Equation, which is as follows:
Assets = Liabilities + Equity ( Capital)
Equity = Assets - Liabilities
            = 2,000 - 1,200 
            = 800.

Multiple choice business organisation and correspondence meaning, scope, nature and importance of business organisation factors affecting business interrelationship between industry, commerce and trade other aspects of a business

Which one of the following is INCORRECT about closing stock?

  1. It is added into current assets

  2. It is deducted from Material available for use

  3. It becomes opening stock of next year

  4. It reduces the resources of business
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Closing stock is an asset that represents unsold goods. It does not reduce the resources of a business; rather, it is a resource that has been retained for future sale.

Multiple choice civics direct taxes black money and tax evasion meaning of tax public revenue : direct and indirect taxes income tax

In case of annuity, the average after tax profits are ___________.

  1. equal to any year's profits

  2. more than any year's profits

  3. less than any year's profits

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An annuity involves a series of equal payments at regular intervals. Therefore, the average after-tax profit is equal to the profit of any individual year.

Multiple choice commercial studies industrial relations, trade unions and social security concept, scope and social security in india concept of social security insurance - introduction and importance

PF amounts i.e. employees & employers share has to be deposited _____________.

  1. With income tax authorities

  2. State Provident Fund Commissioner

  3. Regional Provident Fund Commissioner

  4. None of above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to the employees provident funds and miscellaneous provisions act, 1952 the employees have to contribute a total of minimum twelve percent of their salary with dearness allowance to the funds established under the schemes prescribed by the central government. The contribution to the provident fund is deposited by the middle of the next month from the date when the salary got due to the Regional provident fund commissioner.